PRACTICAL VIEWON

INTERNAL AUDIT OF EXCISE

- CA.DHIRAJ RAJ SINDWANI

AGENDA

Activities related to Excise Department

Movement of Documents

Entries in Accounts Department

Main Points for attention in Internal Audit

Activities related with Excise Dept.

Excise linked with

Production Disposal

For levyingDuty

For PaymentOf Duty

Purchase

For taking Credit

TRANSIT LOSS

INVOICE (Purchase Bill)

INVOICE •Party Name•Regn. No.•Invoice No./ Date•Quantity•Value•Duty

2 units x duty of 3 units 3 units

GRN

2 units

EXCISE DEPT

Corresponding Entry in Accounts Department

Assessable ValueExcise Duty

Example : Purchase Of Raw Material

PURCHASE A/C DR.

10,000

1,0001,000

TO PARTY

11,000

CREDIT AVAILABLE IN PART II = EXCISE RECEIVABLE A/C

EXCISE RECEIVABLE A/C DR.

Credit

POINTS FOR ATTENTION (PURCHASE)

To check the system that Credit on all the Invoices has been taken, and taken once only.

To take Credit at the earliest possible.

Sample Checking.To check whether the balance

brought forward on next page is correct or not.

Entered on 28.9.07

on 3.10.07

We should take Credit up to 30.9.07, so that while paying duty on 5.10.07, we can use this Credit.

Invoices & RG 23 A/C II and

RG 23 A/C I & RG 23 A/C II

Activities related with Excise Dept.

Excise linked with

Disposal

For PaymentOf Duty

Purchase

For taking Credit

Production

For levyingDuty

Daily Production Report

PRODUCTION DEPT EXCISE DEPT

Qty of FG (Manuf)

POINTS FOR ATTENTION (PRODUCTION)

Entry should be made daily in DSA, whether there is production or not.

Entry of Finished Goods only i.e. Ready to Sell .

Surprise checking of DSA to ensure that all the data is being entered timely or not.

Activities related with Excise Dept.

Excise linked with

Purchase

For taking Credit

Production

For levyingDuty

Disposal

For PaymentOf Duty

INVOICE

DESPATCH DEPT

EXCISE DEPT

Qty. of FG (Manuf)

Qty of FG (Sold)Assessable ValueDuty Payable

Corresponding Entry in Accounts Department

Example : Sale Of Finished Goods

Sale Value 15,000

Excise Duty

1,500

PARTY DR.

TO EXCISE DUTY PAYABLE

TO SALES

16,500

15,000

1,500

DUTY PAYABLE AS PER DSA = EXCISE PAYABLE A/C

POINTS FOR ATTENTION (DESPATCH)

Entry should made in DSA in corresponding Account only. (for manufacturing also)

Physical checking of finished goods with balance as per DSA.

Proper check should be made on duty payable amount in DSA.

ER 1

PLA

Amount Paid

TR 6Amount Payable =

Duty PayableCredit Utilized

MONTH END

Corresponding Entry in Accounts Department

Eg - For Payment of Duty through PLA of Rs 800.

PLA A/C Dr. 800To Cash A/C 800

Eg - For Adjusting Duty Payable A/C of Rs 1,500.

Excise Duty Payable A/C Dr. 1,500To PLA A/C 800To Excise Duty Receivable 700

OTHER POINTS FOR ATTENTION To check the system of reversing

credit on 181st day in case of goods sent for Job Work.

To check ER-1 cautiously. Timely deposition (to check by Departmental Seal). All particulars given in ER-1 should be tallied with related

registers. Opening balances should be properly brought forward from last

month balances in ER-1.

Points related to payment of duty. Timely deposition (to check by Bank Seal on TR-6 challan). Payment through PLA even balance is available in RG 23A/C Part

II. Payment of Interest or Penalties through PLA only.

To check whether the remaining 50% Credit of Capital Goods is being taken on 1st day of the next year or not.

Reconciliation should be made with Accounts Department periodically.

THANK YOU